Chapter 2Review of selected annual reports
2.1This chapter examines selected annual reports in greater detail in accordance with standing orders. The committee has selected the annual reports of the following corporate Commonwealth entities for examination:
Sydney Harbour Federation Trust; and
National Gallery of Australia.
2.2In accordance with standing orders, the following summaries of reports examined draw attention to significant matters relating to the operations and performance of bodies during the year under review.
Climate Change, Energy, the Environment and Water portfolio
Sydney Harbour Federation Trust
2.3The Sydney Harbour Federation Trust (the Harbour Trust) annual report for 2021-22 was presented out of sitting in the Senate on 3 November 2022, and was tabled in the House of Representatives on 7 November 2022.
2.4In his foreword, Chair Joseph Carrozzi outlined several changes that the Harbour Trust had experienced in 2021-22, most notably that it was made a permanent entity. He also welcomed Ms Janet Carding as the new executive director of the Harbour Trust.
2.5Ms Carding outlined some of the achievements the Harbour Trust had made in her first reporting period as executive director, including:
development of a new strategic approach to stakeholder engagement;
staging workshops with First Nations people to inform the creation of Guiding Principles for working with First Nations stakeholders;
completion of consultation on conceptual plans for Cockatoo Island/Wareamah, North Head Sanctuary, and the former 10 Terminal at Middle Head; and
completion of works to preserve heritage buildings at the Middle Head site.
Performance reporting
2.6The purpose of the Harbour Trust for the 2021-22 reporting period was to facilitate ‘enhanced appreciation and understanding of the natural and cultural values of Sydney for all visitors, through the remediation, conservation and adaptive re-use of, and access to, Trust lands on Sydney Harbour’.
2.7The Harbour Trust assessed its performance against seven performance measures, of which four were achieved. Performance measures were used to assess the Harbour Trust’s deliverables.
2.8The performance measures Visitor satisfaction with the public domain and Visitor satisfaction were not met. Measured via visitor surveys, the level of satisfaction with the public domain was 82 per cent and the level of overall satisfaction was 88 per cent, both below their targets of more than 90 per cent. The Harbour Trust noted that despite not meeting these targets, visitor satisfaction on both measures rose significantly as sites reopened with the easing of COVID-19 restrictions.
2.9The performance measure Number of volunteer hours was not met. In 2021-22, 8,760 volunteer hours were logged, significantly lower than the target of 20,000hours. The Harbour Trust ascribed this shortfall in part to the impacts of COVID-19.
2.10In addition to performance measures, the Harbour Trust also includes seven management metrics in its annual report. Management metrics were used to assess the corporate operations of the Harbour Trust.
2.11The Harbour Trust did not achieve six management metrics for the reporting period, with one further metric deemed non-applicable.
2.12None of the three revenue metrics, for Leasing Revenue, Venue Hire Revenue,and Visitor Accommodation Revenue, were met.
2.13The re-emergence of COVID-19 with the Omicron variant is reported by the Harbour Trust to have impacted revenue across all three areas. Leasing revenue, which only marginally missed the target of $12.5 million at $11.8 million, was impacted by the Harbour Trust’s decision to provide $1.6 million in targeted rent relief to tenants.
2.14The three applicable management metrics relating to human resources were not met.
2.15The metric Average employment engagement score had a target of 78 per cent for 2021-22, and achieved an engagement score of 64 per cent. The Harbour Trust reported that it will review the results with employees to ‘foster improvements that embed our shared values and behaviours in the way we work, championing our commitment to continuous improvement.’
2.16The metric % of employees with effective Personal Development Plans linked to Corporate Plan had a target of 100 per cent. For 2021-22, 95 per cent of employees had such plans, down from 98 per cent of employees in 2020-21. However, the Harbour Trust notes that the 2021-22 result represents a shortfall from the target of only two employees.
2.17The third HR related management metric reported whether the percentage of affirmative answers to two safety culture questions put to employees met an 87per cent target. Seventy-five per cent of employees agreed with the statement ‘We have a proactive safety culture that identifies and manages risks, and is responsive to my concerns’, while 92 per cent agreed to the statement‘I am encouraged to raise safety concerns, and these are listened to and acted on’.As both targets were not met, the metric was not achieved. The Harbour Trust reported that an influx of new staff during a period of understaffing in the work health and safety (WHS) team ‘appears to have negatively impacted perceptions of a pro-active safety culture with the Harbour Trust,’ which it stated will be addressed through an expansion of the WHS team in 2022-23.
2.18The metric % of Accepted Audit Recommendations (through the [Portfolio Audit Committee] Internal Audit Program) actioned within Agreed Timeframes was not applicable for the 2021-22 reporting period, as there were no relevant open internal or external audit findings as at 30 June 2022.
Financial reporting
2.19The annual report provided a summary of the Harbour Trust’s financial performance in 2021-22. The Harbour Trust reported a total comprehensive income of $24.2 million, significantly higher than the budgeted comparator figure of $3.2 million.
2.20The Harbour Trust outlined several factors which caused budget variances in the year ending 30 June 2022, including:
additional appropriation funding earmarked for capital and operational investment which remained unspent;
the impacts of COVID-19 on revenues from the Harbour Trust’s accommodation and events businesses; and
a substantial increase in the valuation of Harbour Trust’s portfolio of land and buildings following annual adjustments to align with market indices.
2.21The Chair, Executive Director and Chief Financial & Financial Officer stated that the financial statements provided in the annual report comply with the PGPA Act, and that they have reasonable grounds to believe that the Harbour Trust will be able to pay its debts when they come due.
2.22The Australian National Audit Office (ANAO) independent report found that the Harbour Trust’s financial statements for the year ended 30 June 2022 were compliant and presented fairly the financial position, financial performance and cash flows of the entity.
2.23Overall, the committee considers the 2021-22 annual report of the Sydney Harbour Federation Trust to be ‘apparently satisfactory’.
Communications and Arts portfolio
National Gallery of Australia
2.24The 2021-22 annual report of the National Gallery of Australia (NGA) was tabled in the House of Representatives on 8 November 2022 and in the Senate on 21 November 2022.
2.25In his review, Director Nick Mitzevich outlined many of the activities undertaken by the NGA in 2021-22:
holding several exhibitions, including:
-Know My Name: Australian Women Artists 1900 to Now Part 2;
-Jeffrey Smart;
-4th National Indigenous ArtTriennial: Ceremony;
-Ever Present: First Peoples Art of Australia;
supporting nine travelling exhibitions;
acquisition of 109 works as purchases or gifts;
the commissioning from Lindy Lee of a public sculpture titled Ouroboros;
moving the Aboriginal Memorial to the NGA’s central exhibition space;
launching a new website in December 2021, including an on-demand channel with more than 500 documentaries, artist talks and lectures;
creation of the Betty Churcher AO Memorial Oration, an event celebrating women in the arts, in furtherance of the NGA’s Gender Equity Plan;
launching the NGA’s Disability Inclusion Action Plan in June 2022; and
deaccessioning of 621 works that it was determined were likely stolen, illegally excavated, exported in contravention of the law of a foreign country, or unethically acquired.
Performance Reporting
2.26The NGA’s purpose for the 2021-22 reporting period was ‘increased understanding, knowledge and enjoyment of the visual arts by providing access to, and information about, works of art locally, nationally and internationally’.
2.27The NGA assessed its performance in 2021-22 against 68 performance criteria.
2.28While the section of the report allocated for each performance criterion provided the target, and a description of ‘What We Achieved’ against that target, there was no explicit, easy to identify indication of whether the target was met. To determine how many performance criteria the NGA has achieved, one would have to read each of the ‘What We Achieved’ descriptions and assess them against their respective targets.
2.29Other factors made assessment of the NGA’s performance difficult. Some criteria were given non-specific targets such as ’on-going’ or ‘year on year’. In many cases, the ‘What We Achieved’ descriptions were unclear or inappropriate, for instance by providing no timeframe for a criterion which was assessed against a target of achievement by a particular date, or by providing data in numerical form against targets expressed as a percentage.
2.30While the committee commends the NGA for providing information relating to its level of performance against the set targets, it also strongly encourages it to ensure that future Annual Performance Statements clearly indicate, criterion by criterion, whether targets have been achieved, not achieved, partially achieved, or are non-applicable. A performance summary setting out how many of the criteria were achieved and not achieved should also be provided. Non-specific targets such as ‘on‑going’ should also be modified to make it clear what the benchmark for achievement is within the relevant reporting period.
Financial reporting
2.31The annual report provided a summary of the NGA’s financial performance in 2021-22. The NGA reported a total comprehensive income of $757.9 million, significantly higher than the budgeted comparator figure of $11.2million.
2.32The NGA reported budget variances in the year ending 30 June 2022, namely an upwards revaluation of its art collection of $729.15 million, as well as an upwards revaluation of its real property of $48.93 million.
2.33The Chairman, Director and Chief Financial Officer stated that the financial statements provided in the annual report comply with the PGPA Act, and that they have reasonable grounds to believe that the NGA will be able to pay its debts when they come due.
2.34The ANAO’s independent report found that the NGA’s financial statements for the year ended 30 June 2022 were compliant and presented fairly the financial position, financial performance and cash flows of the entity.
2.35The committee considers the National Gallery of Australia’s 2021-22 annual report to be ‘apparently satisfactory’.